Dubai property market sees shift to affordability in Q1

New Asteco report highlights move in market preference away from high-end luxury to value-for-money projects
By Staff writer
Tue 28 Apr 2015 03:06 PM

Renewed focus on Dubai's possibly pent-up demand for affordable housing is spurring local government, investor and developer activity, Asteco said on Tuesday.

Its latest UAE Property View - Q1 2015 Report said the first three months of this year showed little or no movement for Dubai's residential sales market.

Following on from H2 2014 trends, overall apartment and villas sales prices continued to fall, registering a respective 3 percent and 2 percent decline in Q1, with a shift in market preference away from high-end luxury to value-for-money projects located in completed or almost-complete developments.

The report highlighted moves by Dubai Municipality to augment existing reasonably priced rental stock, with the allocation of over 100 hectares of land in Muhaisnah 4 and Al Quoz 3 and 4 to developers to build affordable housing for rent, to cater to those earning between AED3,000-10,000 ($816 - $2,722) per month.

Projects launched during Q1 included the release of 1,000 three and four-bedroom townhouses at Zahra and Hayat in the new Town Square master-planned development by Nshama, located south of Dubai Bypass Road, where a three-bed is available from AED1 million; Acacia Heights with its 479 apartments at Mohammed Bin Rashid City and Reef Residences including 378 apartments in Jumeirah Village Circle.

John Stevens, managing director, Asteco, said: "This highlights the continuous expansion of the city further inland as developers target the more affordable segments of the market, with Damac having led this trend with its Akoya Oxygen project.

"Value-for-money has become more important than property prestige, and with a noticeable decline in buyers from Russia and the CIS countries, due to the worsening economic situation, this is prompting new opportunities, and we are seeing more GCC investor interest in reasonably priced properties, led by Saudi Arabia and the UAE, including off-plan projects specifically designed for investors," he added.

According to Reidin data, transaction volumes for completed apartment properties were down by 12 percent in Q1, with completed villas falling by 35 percent compared with Q1 2014.

"Interestingly, we also finally saw a degree of willingness on the part of premium property vendors to reduce their asking rates, but with limited demand in this segment, transaction activity has been relatively low," said Stevens.

Location preferences saw buyers in Dubai Marina opt for completed properties with off-plan projects such as Marina Arcade, Sparkle Tower, and Marina Gate registering subdued levels of interest despite lower pricing bands, although Asteco expects interest to gather momentum as completion dates loom.

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